Elliott Releases Letter to Hess Holders

Elliott Management Corporation (“Elliott”) today sent a letter to the shareholders of Hess Corporation

. Full text of the letter follows: “Dear Fellow Shareholder: We are writing to you because Hess Management has made repeated untrue statements to Shareholders regarding Shareholder Nominees. After 460% underperformance, John Hess has no record to run on and has resorted to misrepresentations and scare tactics. We want to set the record straight so that Shareholders can make a determination based on facts. Why Is Hess Making False Statements to Its Own Shareholders? #1: Hess FALSE Statement: Hess Management says Shareholder Nominees are paid to “liquidate the Company” or carry out “an Elliott plan.” REALITY: Shareholder Nominees, if elected to the Board, receive $30,000 for each 1% that Hess's stock outperforms Hess's own proxy peers as measured at the end of the Shareholder Nominee's three-year term as a director (2016). The agreement is filed along with Elliott's preliminary proxy materials. The obligation to pay is contractually fixed and not subject to Elliott's discretion. In other words, each Shareholder Nominee receives compensation three years from now and only to the extent that Hess's stock outperforms its peer group. For example, if Hess's stock—which you and we own—outperforms its peers by 10% over the next three years, a Shareholder Nominee who served a full term would receive $300,000 (10 x $30,000). Money well-earned, we believe, and earned in a manner clearly aligned with long-term Shareholders' interests. Shareholder Nominees are completely independent, would constitute a minority of directors, and, unlike Hess's nominees, have not preapproved any plan. If elected to the Board, each of these executives will bring substantial expertise, experience, and independence that we believe is sorely needed at Hess. In sharp contrast, Hess has been a Golden Meal Ticket awarding $540 million to Management and Directors under the current CEO's tenure despite underperforming peers by (460)%. Furthermore, according to public records, John Hess through his family estate has paid millions of dollars directly to board members for service to the estate. #2: Hess FALSE Statement: We have been told that Hess Management in several private meetings with fellow Shareholders stated that Shareholder Nominees would be paid $9 million to sell the Company. REALITY: This is simply not true. The $9 million figure represents the contractual cap (i.e., the maximum payment) in the compensation agreement. In order to achieve a $9 million payment, Hess would need to outperform peers by 300%! 300% outperformance implies a stock price of ~ $250 per share or market capitalization increasing by ~ $60 billion. Here is what that would look like: http://goo.gl/c80AI We believe that all Shareholders should find any such mischaracterizations offensive. Hess has a detailed description of the agreement and competent attorneys paid for with Shareholder money. Any such attempt to mislead these same Shareholders would be outrageous and inconsistent with Management's obligations as a fiduciary. #3: Hess FALSE Statement: Hess Management characterizes Shareholder Nominee compensation as short-term focused. REALITY: Shareholder Nominee compensation is more long-term oriented than any plan currently at the Company. At Hess, Directors are paid in fully vested stock they can sell immediately and Management receives performance share units and options that vest over three years. Furthermore, existing compensation arrangements with Management include a collective $80+ million change of control payment. What Could Be Hess's Motivation? Rather than attack the Shareholder Nominee compensation plan, Hess should adopt it. Hess's current compensation arrangements have failed to link payment to performance, prompting Glass Lewis to write: In our view, shareholders should be deeply concerned with the compensation committee's sustained failure in this area.^1 In 2012, in response to repeated criticism for poor payment practice, Hess put in place performance share units. These units pay out over three years based on Hess performance versus peers—same term and concept as Shareholder Nominee compensation. However, Hess performance units award recipients 50% to 100% of their target bonuses even if Hess is in the bottom 3^rd quartile. ISS has commented: Shareholder returns continue to underperform peers… while CEO pay compensation outranked most peers…. [G]oals for performance shares… do not appear rigorous relative to historical award opportunities.^2 Under the current CEO's tenure Hess has been a Golden Meal Ticket for the Board and Management: FACT #1: Total Compensation Paid to Current Directors: $31.8 million FACT #2: Total Compensation Paid to John Hess: $194.9 million FACT #3: John Hess in Forbes Top 25 Highest-Paid CEOs in 3 of last 5 years FACT #4: Total Compensation Paid to Management (excluding the CEO): $313.2 million FACT #5: Total Compensation Paid to Management and Directors: $539.9 million^3 FACT #6: John Hess's family estate has paid $7.9 million directly to current and past board members, including $2.9 million paid to Lead Independent Directors These numbers are STAGGERING… They are even more shocking in light of Hess's unrelenting underperformance that has gone unchecked due to a Board lacking independence: John Hess Tenure               17 Years 5-Year 4-Year 3-Year 2-Year 1-Year               vs Proxy Peers (333 )% (31 )% (43 )% (29 )% (40 )% (17 )%               vs Revised Proxy (460 )% (45 )% (63 )% (44 )% (47 )% (20 )% Peers               vs Bakken Operators NA (263 )% (984 )% (184 )% (70 )% (16 )%               vs XLE NA (31 )% (57 )% (43 )% (44 )% (20 )%               vs XOP NA (39 )% (81 )% (52 )% (39 )% (15 )% Hess Has an Indefensible Record It Is Time for Change We Ask for Your Support for the Independent Shareholder Nominees Sincerely, Elliott Associates & Elliott International” Please visit www.ReassessHess.com for more information.